Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
China Construction Bank raised some fixed rates.
TERM DEPOSIT RATE CHANGES
Unity credit union has raised some rates. (Unity is the new name for NZCU Baywide.) Heretaunga Building Society did too. And we have added Parkes & Yates to our finance company list and monitoring. Further, Fitch upgraded Christian Savings to BB+/Stable, one notch below investment grade.
MORE ZOMBIE JUICE
Government makes new payments and loans available to Covid-affected businesses who will be able to apply for a new cash payment and/or loan top-up.
OVER THE PEAK?
Our grocery price monitor is recording that the stream has gone out of grocery price increases. They are now at a higher level, but since the end of 2021 there has been a settling back even if it is only to levels we had in the back half of 2019.
LOW RISKS RISE SLIGHTLY
We also monitor credit default swap spreads, for both the NZ Government, and the Australian Government debt. They remain unusually low, similar to northern European sovereigns, but have started to rise since early February.
'JUST DO IT'
The NZIER's panel of experts (their 'Shadow Board') is calling for a sharp increase in the official cash rate over the coming year in the face of intensifying inflation pressures. There was an overwhelming call for the OCR to be increased by +25 basis points to +1 percent at the upcoming meeting, with some appetite for a +50 basis points OCR increase. Beyond the February meeting, there was a wider range in views of how high the OCR needs to go in twelve months’ time.
RETIREMENT SECTOR STUNTS NZX50
Last week, the NZX50 slipped -0.3% last week, with capitalisation down -1.7% over the past month, and down -3.7% in a year. The largest fall for the week was by Tourism Group Holdings (THL, #49), down by -5.4%, dropping it from 48th place to 49th. The largest gain was by Fletcher Building (FBU, #8) back up +5.3%. Of particular concern is what is happening to the listed retirement village/rest home sector. It was down -3.7% last week alone, and with capitalisation down more than -26% in a year.
AUSTRALIA EXPANSION GAINS MOMENTUM
In Australia, Markit issued their preliminary February PMIs. The factory one posted a good further expansion and its best level since mid 2021, and the services on jumped from a contraction to a solid expansion. Overall business sentiment in the Australian private sector is positive with the level of confidence rising to a two month high.
JAPAN CONTRACTS
Markit also reported their preliminary PMIs for Japan for February today. Both dipped. The factory one is still expanding however, but the services one took a large tumble as the country battles Omicron, and is now contracting. Still, companies remained optimistic that activity would improve in the year ahead.
CHINA'S TURN TO SHINE COMING - WESTPAC
Westpac says that with the Covid-affected New Year festival, and the sanitised Winter Olympics behind it, they expect "China's economic promise to shine bright in 2022". China kept its prime loan rates unchanged today after review.
MACRON GETS THE US & RUSSIA PRESIDENTS TO MEET
On the global stage, it has been announced that there will be a face-to-face summit meeting between US President Biden and Russian President Putin, brokered by the French, to try for a Ukrainian resolution. It's an 'in principle' agreement.
LOCAL PANDEMIC UPDATE
In NSW, there has been 4,916 new community cases reported yesterday, a big drop, now with 103,850 active locally-acquired cases, and another 7 daily deaths. There are now 1,288 in hospital there and continuing to fall away. In Victoria they reported 5,611 more new infections yesterday. There are now 44,278 active cases in that state - but there were only 3 deaths there. Queensland is reporting 4,144 new cases and 6 more deaths. In South Australia, new cases have fallen to 1118 yesterday and 3 more deaths. The ACT has 458 new cases and one death, and Tasmania 569 new cases and no deaths. Overall in Australia, more than 16,000 new cases have been reported so far although not all counts are in yet. In New Zealand, there were 12 cases stopped at the border, plus 2,365 new cases reported in the community, another new record.
GOLD SLIPS
In early Asian trading, gold is now at US$1895 and down -US$4 from this morning.
EQUITIES WEAKER
The NZX50 is down -0.3% in late afternoon trade. The ASX200 is up +0.1% in early afternoon trade. Tokyo has opened down -1.0%, Hong Kong has opened down -0.5%, and Shanghai is down -0.4% in its opening trades. It is a long holiday weekend in the US, so Wall Street won't open until Wednesday NZT. But the S&P500 futures are up +0.6% today, presumably on the expectations the Ukraine talks might prevent a hot fight.
SWAPS RETREAT
We don't have today's closing swap rates yet. They are likely to have fallen back today. The 90 day bank bill rate is unchanged at 1.23%. The Australian Govt ten year benchmark bond rate is down -2 bps from Friday to 2.20%. The China Govt 10yr is up at 2.83%. The New Zealand Govt 10 year bond rate is now at 2.76% (down -1 bp from this time yesterday) and now below the earlier RBNZ fix for that 10yr rate at 2.78% (up +2 bps). The US Govt ten year is now at 1.93% and unchanged from where we opened this morning.
NZ DOLLAR HOLDS
The Kiwi dollar is marginally firmer from this morning's open, now at 67 USc. Against the Aussie we are little-changed at 93.2 AUc. Against the euro we are holding at 59.1 euro cents. That means the TWI-5 is still around 71.4.
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BITCOIN FALLS
Bitcoin is down again, now at US$39,217 and while that is up +2.4% from where we opened this morning, it is -8.8% lower than this time on Friday. Volatility over the past 24 hours has been moderate at just on +/- 2.6%.
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60 Comments
We purchased a small business at the start of September but went unconditional before the August 17 lockdown. Got zero covid support due to technicalities and being too new. By the end of November our 30k contingency we started with was gone and we were starting to get organised to wind up as we had had very close to zero clients for October and November which are meant to be busy months.
We got through due to the borders opening with Auckland mid Dec, and by implementing some desperate get (any) work measures.
So I appreciate your comment is a catch all generalisation that probably holds true for 98% but there are still others out there like us it comes across as a bit harsh to. We are going ok now despite a tsunami wrecking our place of business, a la Nina summer meaning we're postponing and cancelling a lot of trips due to weather and now people doing the same because of family members who need to self isolate. So seems likely without all this drama we have a great business during normal times.
30k is a lot to lose for what is effectively a sole operator business with medium to high overheads (although noones been paid for any labour yet). I suspect there are other good businesses with higher staff requirements that would have gone down, and equally were legitimate good businesses but the timing wasn't.
That's incredibly rough, and full respect to you for the courage to start a new business in the middle of this pandemic. In truth, I would prefer we as New Zealand reward such entrepreneurship by having far lower company income tax rates and balancing it with land value tax instead. Reward entrepreneurs such as yourself rather than those who speculate on land. At least the likes of yourself add value to NZ.
"Bitcoin is down again... ."
Bitcoin is indeed the best alternative to traditional capitalism that the new generation can ever come up with.
A great store of value that provides entertainment qualities of violent swings up and down in its conversion rates to the real dollar every moment in time.
Being truly free and open, nothing stops it from a classic movie like bank run and buying that weed cheaper is a matter of waiting for an upswing in the colourful charts from an app on the mobile.
Love it!
CWBW ...... sounds to me you know nothing about cryptocurrencies - you probably don't even know what a "whitepaper" is ? ...best you don't comment on a financial site such as this - you may get away with it with residential property, but here you are really showing your "true colours" .....are you sure CWBW doesn't stand for "Continuously Waxing, BS Walking" ?
Of particular concern is what is happening to the listed retirement village/rest home sector. It was down -3.7% last week alone, and with capitalisation down more than -26% in a year.
Interesting that this is not highlighted by the MSM. Interesting to note Ryman up 3,333% since 2000. But this is definitely a play on the bubble. Down 38% in past 12 months.
Does going to war, still mean invading another country? I admit I can't keep up, but has Russia invaded someone? I know 'anti Russia' is a thing but I never figured out what it was all about. I can see that Russia has huge advantage with oil and gas exports to two of the three biggest economies on earth.
We don't have today's closing swap rates yet. They are likely to have fallen back today.
Interest rate swaps and their relation to nominal US Treasury yields – swap spreads – give us a very important sense of specifically starting with balance sheet capacity; particularly when the general shape and behavior of those spreads may corroborate the same in other parts of the true monetary marketplace.
Quite simply, it takes some financial institution’s balance sheet capacity to take on an interest rate swap (the farther the maturity, the more capacity it requires). If balance sheet capacity (the real money in the system, therefore liquidity) is systemically impaired, as in a crisis, or a crisis that doesn’t really end, then to get dealers to give up their precious balance sheet capacity and engage on the other side of a swap someone would have to pay a hefty premium to make it worth it (risk-adjusted) for the dealer to do so.
Taking up so much more balance sheet capacity relative to other swap tenors is why the 30-year swap spread lags; as in, it was the first to go under zero and remains the deepest into the negative and most profoundly refuses to come back up into the range of even small positive spreads like the 5-year or 10-year. Link
"Last year was said to have been the Year Of Inflation when in truth it was a year for rising deflationary potential ... Nominal yields are up on nothing more than the expectation of rate hikes in the short run, while everything else from curve shapes to these various spreads is wondering what planet policymakers are making policy for."
No way you will catch us in a old folks home, I believe in staying in your own home till the end all going well. My Grandfather in Sweden had a social worker pestering him to move from his apartment to an old folks home but he refused. He was 91 at the time and living alone.
His main complaint about the home was that it was full of old people.
There probably aren't many literary types reading this blog but the latest behaviour of the protesters throwing excrement at the police shows the true nature of these Yahoos. I use the word Yahoo pointedly because this is the term 17th century author Jonathan Swift used to describe this type of human behaviour in Book 4 of "Gulliver's Travels". (The children's versions usually only include books 1 & 2.....'little men' and 'big men'.)
Then to learn that the Government has caved into their demands means New Zealand is now ultimately governed by the few.
In some ways our traditional democratic system has always been abused by the acceptance of lobbyists. I have said before that the existence of corporate lobbyists in Wellington is undemocratic and one could at a stretch say that the protesters are really just a loud and noisy group of lobbyists. So, in some ways our kowtowing to corporate lobbyists has 'brought on the protesters'. If we tolerate corporate lobbyists we must tolerate protesters to be consistent.
But the difference now is, firstly, the latest behaviour of the protesters is a form of violence and, secondly, the repercussions of the government caving into the protesters could result in many more deaths in the community and the protesters actions could then be considered a form of terrorism.
Thus, the protesters should now be considered a form of oligarchy or government by the few.
The almost immediate response to the news of protesters throwing human excrement at the police was Ardern reiterating that the mandates will be ended as soon as Covid has peaked. This, in my book, is Ardern being forced to quickly respond publicly to the nation's disgust at the protesters' actions and amounts to 'caving in' to the protesters. The cause and effect here is subtle and will be misunderstood by the obtuse.
The problem is how much longer would the people have lived without Covid anyway ? Some or probably most in their 70's onwards with other serious health conditions had only weeks or months to live anyway so at what cost to everyone else ? Is it worth millions or tens of millions each life saved ? I mean someone in their 90's for example has had a great run anyway. Sounds a bit ruthless but the unseen stress being caused and cancelled operations is taking years off much younger peoples lives. When we look back on this in a few years time I think we will come to the conclusion we have totally overblown this. The initial response was great but soon as we hit that 90% vax rate it was time to give up the mandates and open up.
Yes. We have somewhere between 1000 and 2600 people (depending on whether you believe Otago University or the WHO) who didn't die of the flu in 2020 and 2021. Quite possible their borrowed time will end with Omicron. Perhaps not, because 95% got a free vaccine, but there is some 'fuel load' there.
That's what I notice too, it's ok to threaten, insult, disrupt or commit lawless acts for one ideology in the name of a perceived noble cause. It's also righteous to talk about how bad one leader is but not say anything bad about other leaders elsewhere. It's truly is double standards.
Common sense, personal responsibility, and especially manners have gone out the window. We replaced this with tribalism, as what is your sex, sexual preference, race, religion, where you live, how much money you have, do you own a house and now it's your vaccine status. There are no real discussion or debate to come to solutions, only shouting and belittling. It's never ending. Sigh....
paashaas
How do immigrants not know about NZ's history? To avoid nasty repercussions in the future, Maori are allowed a higher threshold to cross before their protests are deemed illegal.
As a pakeha whose ancestors have been in NZ since the 1840s, I have no problem with this.
As a recent immigrant you should understand this; if you don't, then I suggest you move to another country...Australia might take you.
The AGL proposal aimed at phasing out coal from Australian power generation, currently supplying around 80% of baseline in all but SA, needs to read Gail Tverberg a bit more closely.....
Short version: the transition to greenish energy is gonna be harder, slower, more expensive and more politically unpalatable than had ever been foreseen.
To quote the wisdom of Margin Call:
....
The only reason that they all get to continue living like kings is cause we got our fingers on the scales in their favor. I take my hand off and then the whole world gets really f___in' fair really f___in' quickly and nobody actually wants that.
....
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